a-reit

A-REITSURVEY 2011

2 CONTENTS

A-REIT SURVEY 2011

CONTENTS

GETTING THE INSIDE INFORMATION ................................................... 3

1. TOP 3 PERFORMERS ........................................................................ 4

2. PARTICIPANTS AND CRITERIA ........................................................12

Survey Participants ...................................................................................................14

Survey Criteria ...........................................................................................................15

Survey Period ............................................................................................................15

3. SECTOR REVIEW ............................................................................16

4. SURVEY FINDINGS ........................................................................22

Financial Criteria for Ranking ............................................................................... 24

Investment Criteria for Ranking ..............................................................................25

Sector Composition ................................................................................................ 26

Property Valuations .................................................................................................27

Property Transaction Activity ................................................................................. 28

Merger and Acquisition Activity ............................................................................ 28

Sector Gearing ........................................................................................................ 29

Location of Property Assets .................................................................................... 30

Cost of Borrowings .................................................................................................31

Weighted Average Lease Expiry ..............................................................................31

5. FULL RANKINGS ............................................................................32

6. DETAILED SURVEY RESULTS .......................................................... 34

7. EXPLANATION OF CRITERIA AND RANKINGS ............................... 44

Financial Criteria ...................................................................................................... 44

Investment Criteria .................................................................................................. 44

Method of Ranking .................................................................................................. 45

8. CORPORATE FINANCE AT BDO ...................................................... 46

About BDO ............................................................................................................... 50

9. DISCLAIMER ................................................................................... 51

Sources of Information ............................................................................................51

Glossary ......................................................................................................................51

3INTRODUCTION

A-REIT SURVEY 2011

GETTING THE INSIDE INFORMATION

KEY FINDINGS

• 30 of 40 entities recorded a positive total return for the year

• Volatility of the Property Index lower than the All Ordinaries at

30 June 2011

• Increase in the median NTA for the fi rst time since 2007

• Average increase in property values of 0.6%

• Entities are still generally trading at a discount to NTA (23%) but

this discount has decreased since 2010 (37%) and 2009 (55%)

The BDO Corporate Finance Team is pleased to present the 17th edition of the BDO A-REIT Survey.

Sebastian Stevens

National Corporate Finance Leader

The 2011 Survey covers the 12 month period ending 30 June 2011, a

period of consolidation and relative stability for the Sector after it suffered

substantial price falls between 2007 and 2009.

Capital management initiatives undertaken during 2009 and 2010 repaired

the balance sheets and reduced the gearing of a number of entities, and

helped to reduce risk and restore confi dence in the Sector. 2011 has seen

property transaction and merger and acquisition activity return on the back

of this more stable operating environment.

Whilst a degree of uncertainty currently exists around global and local

macro-economic conditions, the major A-REITs are now well positioned to

withstand any future property downturn. Equally, they should benefi t from

a strong upside if and when a sustained property recovery eventuates.

However, those A-REITs that have yet to adequately resolve issues around

gearing and under performing assets will continue to be subject to investor

uncertainty and remain marked down by the market.

The year ahead therefore represents another interesting and hopefully

positive year for the Sector.

On behalf of the A-REIT Survey team assisting me compile the 2011 Survey

(Steven McCarthy and Cato Morgan) and the national corporate fi nance

team, we hope you enjoy the 2011 Survey and wish you the best for 2012.

4 TOP 3 PERFORMERS

1. TOP 3 PERFORMERS

5TOP 3 PERFORMERS

A-REIT SURVEY 2011

TOP 3Ranked entities are all Property

Index members

CQOCharter Hall Offi ce REIT ranked number one overall

OFFICESector well represented among the best

performing REITs

6 TOP 3 PERFORMERS

A-REIT SURVEY 2011

1 CHARTER HALL OFFICE REIT

Charter Hall Offi ce REIT (ASX:CQO) invests in high grade offi ce buildings predominantly located in major business districts across Australia and the United States. CQO is managed by Charter Hall Group. It is a member of the S&P/ASX 200 Property Index.

At 30 June 2011 CQO owned 19 properties in Australia and 14 properties in the United States. In

line with its strategy to reweight its portfolio exposure to Australia, CQO has fi nalised its exit from

its non-core markets with the sale of its Japanese portfolio during FY11 and the exit of its German

asset post fi nancial year end. On 3 August 2011 it announced the proposed sale of its entire US

portfolio for a gross price of US$1.7 billion.

CQO’s total unit-holder return of 43% for the year was the highest return of any of the S&P/ASX

200 Property Index members. Consistent with the strong performance exhibited by the offi ce sub-

sector through the year, CQO delivered increased earnings, higher distributions, lower debt and

strong portfolio management metrics. Units in CQO also demonstrated a high level of liquidity,

with CQO being one of the most actively traded REITs on the ASX during FY11.

Key achievements of CQO during the year included:

• Increase in statutory earnings to $69.2 million, up from a loss of $91 million in FY10

• Reduction in its look-through gearing from 45% to 43%

• Increase in full year distributions of 9.5% to 20.25 cents per unit – representing a 7%

distribution yield which was 100% tax deferred

• Repaid, refi nanced or removed all debt due to mature prior to FY14

• Portfolio occupancy of 87%, comprising 96% in Australia and 82% in the United States

• Increase in its WALE from 4.7 years to 5.1 years.

2.0

3.0

4.0

5.0

JUN 2011JUL 2010 DEC 2010

NTA PRICE

$

PRESENTED BELOW IS CQO’S NTA PER SECURITY AND ASX PRICE OVER THE 12 MONTHS TO 30 JUNE 2011

7TOP 3 PERFORMERS

“We made signifi cant progress towards our strategy articulated in 2008 to re-weight towards Australia by signing a contract to sell the entire US portfolio against an uncertain backdrop. Additionally, we delivered on our objectives of re-leasing vacant space and repaying, removing or refi nancing debt, enhancing the quality of earnings during the year.”

CHARTER HALL OFFICE REIT – CEO, ADRIAN TAYLOR

$50MIncrease in the value of its

Australian assets

20.25Cents per unit paid in distributions

100%Tax deferred distribution

96%Australian occupancy

5.1Years WALE

136%Liquidity

43%One year return

8 TOP 3 PERFORMERS

A-REIT SURVEY 2011

2 GPT GROUP

GPT Group (ASX:GPT) is a diversifi ed property group. It is focussed on the ownership, management and development of real estate in retail, offi ce and industrial markets. GPT comprises 8% of the S&P/ASX 200 Property Index.

At 30 June 2011 GPT’s assets totalled $9.3 billion. 59% of its assets were classifi ed as retail and

29% as offi ce. GPT’s diversifi ed property portfolio delivered solid operational performance in the six

months to 30 June 2011, achieving 3.6% comparable income growth.

After undertaking some substantial restructuring and capital management initiatives in recent years,

GPT now has a solid, conservatively geared balance sheet. Gearing at 30 June 2011 stood at 21%.

Net tangible assets per security have been increasing on the back of positive valuation movements

across its portfolio.

Some key achievements of GPT during FY11 included:

• Increase in its NTA per security to $3.64, up 6% during the year

• Discount to NTA reduced to 15%

• Paid cash distributions of 17.2 cents for the full year

• 6% distribution yield - which was 100% tax deferred

• High occupancy levels with retail at 99.9%, and offi ce and industrial at 97.5%.

PRESENTED BELOW IS GPT’S NTA PER SECURITY AND ASX PRICE OVER THE 12 MONTHS TO

30 JUNE 2011

2.5

3.0

3.5

4.0

JUN 2011JUL 2010 DEC 2010

NTA PRICE

$

9TOP 3 PERFORMERS

A-REIT SURVEY 2011

“GPT’s performance in the fi rst half of 2011 refl ects the strength of the business, which has been reinvigorated over the past two years. We continue to deliver on our promises, with 8 per cent earnings growth and low debt costs, completing a further sell down in our wholesale funds and fi nalising the last non-core asset sales.”

GPT GROUP – CEO, MICHAEL CAMERON

17.2Cents full year distribution

134%Liquidity

6%Increase in NTA per security

19%One year return

100%Tax deferred distribution

2%Increase in value of

investment properties

10 TOP 3 PERFORMERS

A-REIT SURVEY 2011

3INVESTA OFFICE FUND

Investa Offi ce Fund (ASX:IOF) invests in commercial property in core CBD markets throughout Australia and select offshore markets in the US and Europe. In March 2011, management of IOF was transferred from ING Management Limited to Investa Property Group. IOF is a member ofthe S&P/ASX 200 Property Index.

At June 30 2011, IOF held 16 properties in Australia, four in the US, and three in Europe totalling $2.6 billion in property assets. Over the

past 12 months, the sale of three offshore assets have been fi nalised in line with the strategy of repositioning IOF’s portfolio to focus on

the Australian CBD offi ce markets. At 30 June 2011 65% of IOF’s portfolio was located in Australia; whilst during FY11 68% of IOF’s rental

income was derived from Australia.

IOF has low gearing and a tenant register comprised predominantly of government and blue chip tenants. It recorded a total one year unit

holder return of 19% and exhibited high levels of trading liquidity through the year. Earnings per unit for the year increased by 231% to

5.3 cents per unit (FY10: 1.6 cents per unit) predominantly due to positive asset revaluations.

Key metrics of IOF at 30 June 2011 included:

• Look through debt to total assets of 21%

• Portfolio occupancy of 93%

• WALE of 4.8 years

• 3.9 cents per unit distributions paid representing a 6% distribution yield.

11TOP 3 PERFORMERS

A-REIT SURVEY 2011

“From an operational perspective, the past 12 months have been focused on improving vacancy, delivering on our redevelopments and reducing offshore and suburban exposure, in line with our strategy of focusing on Australian CBD offi ce markets”

INVESTA OFFICE FUND – FUND MANAGER, TINO TANFARA

0.5

0.6

0.7

0.8NTA PRICE

JUN 2011JUL 2010 DEC 2010

$

PRESENTED BELOW IS IOF’S NTA PER SECURITY AND ASX PRICE OVER THE 12 MONTHS TO 30 JUNE 2011

19%One year return

8%Operating cash yield

93%Portfolio occupancy

4.8Years WALE

124%Liquidity

12 PARTICIPANTS AND CRITERIA

2. PARTICIPANTS AND CRITERIA

13PARTICIPANTS AND CRITERIA

A-REIT SURVEY 2011

$148BCombined assets of participants

25%Of the entities surveyed are

classifi ed as retail

TWOIndustrial focused entities

on the ASX

40Participants included in the 2011

Survey

14 PARTICIPANTS AND CRITERIA

SURVEY PARTICIPANTSThe 2011 Survey incorporates entities within the real estate investment trust sector of Australia as at

30 June 2011. 40 entities with combined total assets of $148 billion have been included in the 2011

Survey. Entities that have been classifi ed as property developers, or have market capitalisations less

than $10 million, have been excluded from the 2011 Survey. Each year, the eligibility of participants

for inclusion in the BDO A-REIT Survey is reassessed.

ENTITY NAME SIZE1 SECTOR

Abacus Property Group 1,602 Diversifi ed

Australian Education Trust 354 Offi ce

APN European Retail Property Group 526 Retail

Astro Japan Property Group 1,325 Diversifi ed

Australand Property Group 3,760 Diversifi ed

Aspen Group 598 Diversifi ed

Brookfi eld Prime Property Fund 656 Offi ce

Bunnings Warehouse Property Trust 1,242 Retail

Challenger Diversifi ed Property Group 876 Diversifi ed

Centro Retail Group 1,790 Retail

CFS Retail Property Trust 8,491 Retail

Charter Hall Group 958 Diversifi ed

Cromwell Property Group 1,539 Diversifi ed

Centro Properties Group 6,715 Retail

Commonwealth Property Offi ce Fund 3,861 Offi ce

Charter Hall Offi ce REIT 3,225 Offi ce

Charter Hall Retail REIT 1,905 Retail

Dexus Property Group 7,988 Diversifi ed

EDT Retail Trust 1,328 Retail

Galileo Japan Trust 855 Diversifi ed

Goodman Limited 7,565 Industrial

Growthpoint Properties Australia 1,190 Diversifi ed

GPT Group 9,347 Diversifi ed

ING Real Estate Entertainment Fund 236 Diversifi ed

Generation Healthcare REIT 199 Diversifi ed

ING Real Estate Community Living Group 421 Offi ce

Investa Offi ce Fund 2,505 Offi ce

ALE Property Group 894 Diversifi ed

Mirvac Group 9,138 Diversifi ed

Mirvac Industrial Trust 433 Industrial

Multiplex European Property Fund 424 Retail

Real Estate Capital Partners USA Property Trust 260 Diversifi ed

RNY Property Trust 461 Offi ce

Stockland Trust Group 14,571 Diversifi ed

Trinity Group 152 Diversifi ed

Trafalgar Corporate Group 153 Offi ce

Thakral Holdings Group 1,084 Diversifi ed

Tishman Speyer Offi ce Fund 1,065 Offi ce

Westfi eld Group 35,929 Retail

Westfi eld Retail Trust 12,431 Retail

1. Total reported assets as at 30 June 2011 ($ millions)

15PARTICIPANTS AND CRITERIA

SURVEY CRITERIAExplanation of the criteria used in the 2011

Survey together with the methods of weighting

and ranking is included at Section 7. A summary

of the scoring for the 2011 Survey is as follows:

TOTAL OVERALL SCORE

OF 2011 SURVEY WEIGHTED SCORE %

Financial criteria 100 50

Investment criteria 100 50

TOTAL OVERALL 200 100

The fi nancial and investment criteria and their

respective weightings are as follows:

FINANCIAL CRITERIA WEIGHTED SCORE

Cash yield on weighted

average net assets20

Distribution yield 20

Tax advantaged distributions 20

Movement in NTA 20

Premium/(Discount) to NTA 20

PERFECT SCORE 100

INVESTMENT CRITERIA WEIGHTED SCORE

Total return (one year) 50

Total return (three year) 25

Volume of trading on ASX 25

PERFECT SCORE 100

SURVEY PERIOD The 2011 Survey only takes into account

information disclosed in each entity’s annual

report for the year ended 30 June 2011. For

those entities with 31 December year ends, half

year reports to 30 June 2010 and 2011 have

been used together with the annual report to 31

December 2010 to create comparable results for

the year ended 30 June 2011.

16 SECTOR REVIEW

3. SECTOR REVIEW

17SECTOR REVIEW

A-REIT SURVEY 2011

67% Property Index remains 67% off

its 2007 highs

10 Entities recorded negative returns

for the period

5.8% Total return of Property Index

for FY11

18 SECTOR REVIEW

19SECTOR REVIEW

A-REIT SURVEY 2011

OVERVIEWThe 12 months to 30 June 2011 was a period of stability and consolidation

for most entities in the A-REIT sector.

FY11 provided managers with a relatively stable external operating

environment. Those REITs that had repaired their balance sheets during

2009 and 2010 were able to focus on their fund’s core strategies and

undertake active portfolio management.

The major REITs have now signifi cantly reduced their look-through gearing

levels from around 40% in June 2008 to approximately 30% currently.

These REITs are now well positioned to withstand any near term pressures

that may be experienced by the property sector.

FY11 also saw a welcome return to property transaction activity with a

number of signifi cant transactions completing. Offshore pension funds,

in particular, were attracted by strong valuation metrics and a stable

Australian economy.

However, despite the improving strength of the larger REITs, smaller entities

in the Sector have found accessing funding (both equity and debt) more

diffi cult and a number of these entities continue to have very leveraged

balance sheet positions. Whilst some REITs have been able to recover their

security price to a level above their NTA per security, the smaller end of the

Sector continues to trade at a signifi cant discount to NTA.

It was these smaller REITs that were the target of signifi cant acquisition

interest in the Sector over the year, the fi rst sign of meaningful acquisition

activity in the Sector since the global fi nancial crisis. Both overseas

fi nancial investors and re-capitalised local REITs were active acquirers.

RETURNSThe performance of the A-REIT sector (based on the Property Index)

relative to the All Ordinaries for the period between February 2007 (the

date when the Property Index reached its all time high) and 30 June 2011,

is set out below:

CAPITAL RETURNS OF S&P/ASX 200 PROPERTY INDEX AND ALL

ORDINARIES INDEX – FEBRUARY 2007 TO JUNE 2011

100%

ALL ORDINARIES

PROPERTY INDEX

20112010200920082007

Source: Bloomberg

The one year, three and fi ve year total annual (capital and dividend) returns

to 30 June 2011 for each of the REITs that are members of the Property

Index are set out in the table below:

PROPERTY INDEX TOTAL ANNUAL RETURNS TO 30 JUNE 2011

A-REIT NAMEASX

CODE

1 YEAR

RETURN

3 YEAR

RETURN

5 YEAR

RETURN

Stockland Trust Group SGP -2.1% -5.8% -6.3%

GPT Group GPT 19.0% -24.8% -24.3%

Mirvac Group MGR 1.4% -17.8% -15.4%

Dexus Property Group DXS 21.3% -6.0% -2.3%

Australand Property Group ALZ 26.9% -3.4% -9.3%

Charter Hall Group CHC -3.8% -10.8% -8.9%

Abacus Property Group ABP 21.8% -18.1% -13.9%

Westfi eld Group WDC -3.9% -5.9% -2.6%

CFS Retail Property Trust CFX 2.9% 6.3% 6.0%

Charter Hall Retail CQR 25.8% 1.7% -8.9%

Bunnings Warehouse Property Trust BWP 4.8% 10.8% 5.6%

Commonwealth Property Offi ce Fund CPA 7.7% -2.2% -1.1%

ING Offi ce Trust IOF 18.7% -7.2% -5.5%

Charter Hall Offi ce CQO 42.7% -17.9% -17.9%

Goodman Group GMG 16.8% -31.2% -28.3%

S&P/ASX 200 (GICS) Property Accumulation

Index5.8% -9.7% -10.0%

Source: UBS

• Despite a modest recovery, the Sector has not recovered relative to

other equity indices since the global fi nancial crisis. The total return

(capital and dividends) for the Property Index for the 12 months to 30

June 2011 was 5.8%. The equivalent return for the S&P/ASX 200 All

Ordinaries Index was 9.3%

• Whilst the Property Index has somewhat recovered from its lows of

March 2009 (when it was approximately 80% below its February 2007

high), at 30 June 2011 it remained 67% off its high

• The Property Index has averaged a total annual return of negative

10% over the last fi ve years. Only two of the REITs that comprise the

Property Index (CFS Retail Property Trust and Bunnings Warehouse

Property Trust) have recorded a positive return over the past fi ve years

• Westfi eld, the world’s largest REIT (and which comprises 28% of the

Property Index) recorded a negative 3.9% return for the year ending

30 June 2011, underperforming the Property Index

• 10 entities in the Sector recorded negative returns for the period.

20 SECTOR REVIEW

A-REIT SURVEY 2011

21SECTOR REVIEW

A-REIT SURVEY 2011

VOLATILITYThe volatility of the Property Index compared to the All Ordinaries (for the period between February

2007 and 30 June 2011) is set out below. Volatility has been calculated on an annualised rolling one

month ‘Close-Close’ basis.

• Since February 2007 the Sector has experienced increased volatility compared to the All

Ordinaries

• Between February 2007 and November 2008, volatility increased measurably as the real risks of

the Sector became apparent and it was exposed to the full impact of the global fi nancial crisis

• Volatility reached its peak in October 2008 when the Property Index moved more than 5% in a

day on 13 occasions out of 23 trading days

• Volatility has subsequently reduced during FY10 and FY11 as recapitalisations and other capital

management initiatives have reduced the Sector’s perceived risk. The volatility of the Sector is

now generally consistent with the volatility of the All Ordinaries. However, towards the end of

FY11, the All Ordinaries exhibited higher volatility than the Property Index.

VOLATILITY OF ALL ORDINARIES AND PROPERTY INDEX

40%

80%

120%

JUN 2011FEB 2009FEB 2007

ASX ALL ORDINARIESASX PROPERTY 200 INDEX

22 SURVEY FINDINGS

4. SURVEY FINDINGS

23SURVEY FINDINGS

A-REIT SURVEY 2011

13Entities did not pay a distribution

during FY11

0.6%Average increase in property values

23%Median discount to NTA

47%Average sector gearing

24 SURVEY FINDINGS

A-REIT SURVEY 2011

FINANCIAL CRITERIA FOR RANKING

RANKING CRITERIAHIGH –

FY11

LOW –

FY11

MEDIAN –

FY11

MEDIAN-

FY10

Cash yield on weighted

average net assets19.3% -19.7% 6.7% 6.2%

Distribution yield 20.4% 0.0% 6.2% 2.7%

Tax advantaged distributions 100.0% 0.0% 26.6% 1.5%

Movement in NTA 45.9% -209.7% 0.5% -14.3%

Premium/(Discount) to NTA 37.8% -108.2% -23.3% -37.1%

The 2011 Survey has again presented some very interesting results in the

fi nancial criteria:

• The median operating cash yield has increased slightly during FY11

indicating that the active portfolio management undertaken by

managers through the year has resulted in improved rental yields

• 13 entities did not pay a distribution during FY11 (compared with

19 from the previous year), resulting in an increase in the median

distribution return. The entities that currently have suspended

distributions generally have low market capitalisations and signifi cant

exposure to overseas assets. We note that a number of entities have

indicated that they will recommence dividends once their capital

management actions are complete

• For the fi rst time since 2007, the median NTA has increased. The

increase in NTA was primarily due to an increase in property valuations

across the Sector. There was also comparatively fewer dilutive capital

raisings undertaken during FY11, relative to the previous three years

• The Sector continues to trade at a substantial discount to NTA (median

discount of 23%). As security prices have increased, this discount has

reduced compared to the FY10 discount (37%).

25SURVEY FINDINGS

A-REIT SURVEY 2011

INVESTMENT CRITERIA FOR RANKING

RANKING CRITERIAHIGH –

FY11

LOW –

FY11

MEDIAN –

FY11

MEDIAN –

FY10

Total return (one year) 233.3% -73.1% 12.5% 22.1%

Total return (three year) 16.1% -74.9% -10.2% -34.0%

Volume of trading on ASX 148.9% 2.8% 43.3% 54.2%

The median total return (capital and dividends) for FY11 of the entities

surveyed was 13%, extending the recovery in Sector returns following a

22% return in FY10. This refl ects the increasing confi dence in the Sector

after the turbulent 2008 and 2009 years.

• 30 entities out of 40 achieved positive returns in FY11, a similar ratio to

FY10. We note only four entities achieved positive returns in FY09

• Trinity Consolidated Group (TCQ) achieved the highest return for the

year (233%) on the back of a substantial profi t turnaround from FY10.

During FY11, TCQ resolved several long standing legal issues and sold

their Japanese assets, which contributed to a signifi cant improvement in

its NTA and gearing metrics. ING Real Estate Community Living Group

(130% one year return) and Centro Retail Group (109% one year return)

also performed strongly in FY11 coming off low bases

• There has been an increase in three year returns for FY11, as the effect

of two years of positive performance now constitute a more signifi cant

portion of the three year timeframe. The median three year return

has increased from negative 34% to negative 10.2%, while 10 entities

recorded positive three year returns, a similar proportion to FY10

• In 2011 liquidity was at a more historically consistent level. Trading

volumes evident in previous periods associated with a high number

of sellers in the market and an increased number of capital raisings no

longer had an impact on liquidity.

26 SURVEY FINDINGS

A-REIT SURVEY 2011

SECTOR COMPOSITION The combined market capitalisation of all 40 Sector participants totalled

$76 billion at 30 June 2011.

The 16 entities that comprised the leading A-REIT market index (the S&P/

ASX200 Property Index) make up 94% ($72 billion) of this total.

An additional four entities with a combined value of $1.7 billion are

included in the S&P/ASX300 Property Index.

The Sector continues to be dominated by Westfi eld Group which

represented nearly 28% of the Property Index as at 30 June 2011. However,

we note that this is a substantial reduction from 30 June 2009 when

Westfi eld Group represented almost 46% of the Property Index. The

reduction in Westfi eld Group’s weighting over the past two years is due

to the divestment by Westfi eld Group of various assets into the Westfi eld

Retail Trust, as well as the strong recovery in the security prices of other

Property Index members.

The next largest entity was Stockland Trust Group which comprised 12% of

the Property Index.

The 24 non Property Index members contributed $4 billion to the

combined market capitalisation of the Sector at 30 June 2011.

Set out opposite is the proportion of the Sector’s total market

capitalisation that each sub-sector makes up.

Given that the retail sub-sector has Westfi eld Group and Westfi eld

Retail Trust as members, this sub-sector contributes $36 billion (47%)

to the Sector’s market capitalisation. The industrial sub-sector now only

comprises two entities (Goodman Group and Mirvac Industrial Trust) and is

the smallest of the sub-sectors.

MAKE-UP OF THE PROPERTY INDEX BY ENTITY

STOCKLAND

TRUST GROUPWESTFIELD RETAIL TRUST

GPT GROUP

MIRVAC GROUP

GOODMAN GROUP

DEXUS PROPERTY GROUP

CFS RETAIL PROPERTY TRUST

WESTFIELD GROUP

OTHER

RETAIL

DIVERSIFIED

OFFICE

INDUSTRIAL

MAKE-UP OF THE PROPERTY INDEX BY SUB-SECTOR

27SURVEY FINDINGS

A-REIT SURVEY 2011

PROPERTY VALUATIONS In our 2010 Survey we noted that, following two years of downward

pressure on property valuations, there was increasing evidence to suggest

that capitalisation rates had stabilised.

The fi ndings from our 2011 Survey indicate that this period of stabilisation

has continued with values increasing on average by 0.6% during the

12 months to 30 June 2011.

The graph opposite illustrates the distribution of valuation movements

of the entities surveyed. Of the 40 entities surveyed, 24 entities recorded

valuation increases with 16 experiencing valuation decreases.

Brookfi eld Prime Property Fund recorded a $42 million increase in

valuations, refl ecting improved conditions in the offi ce sub-sector. Trinity

Group recorded a 9% increase in valuations on the back of increased

leasing activity.

We note that Commonwealth Property Offi ce Fund’s (CPA) sale of 259

George Street, Sydney on 28 July 2011 puts an interesting perspective

on current valuations. The sale was negotiated at a price of $395 million,

a 15.3% premium to the asset’s 30 June 2011 independent valuation of

$342.5 million, and refl ecting an implied capitalisation rate of 6.3%.

CPA believes that this sale will provide valuable transactional evidence

for independent valuers in assessing relative asset values.

PERCENTAGE OF ENTITIES BY VALUATION INCREMENTS

2% 4% 10% 17% 7%

LESS THAN -10% -10% > -5% -5% > 0% 0% > 5% > 5%

24% 8% 2%7%8%

20102011

3.9% INDUSTRIAL

-0.3%DIVERSIFIED

2.3% OFFICE

-0.6%RETAIL

28 SURVEY FINDINGS

A-REIT SURVEY 2011

PROPERTY TRANSACTION ACTIVITYAfter an absence of property transactions during and immediately following the fi nancial crisis, asset

transaction activity increased signifi cantly during 2010 and into 2011.

Substantial transactions over the past 12 months have included:

Commonwealth Property Offi ce Fund acquired three A-grade offi ce buildings in the Melbourne CBD

for $581 million in November 2010. These were acquired on a 7.6% weighted average capitalisation rate.

CFS Retail Property Trust acquired a portfolio of four Direct Factory Outlet (DFO) retail outlet

centres for $498 million in October and December 2010.

Bunnings Warehouse Property Trust purchased 10 Bunnings tenanted properties in February 2011

for $241 million.

Many offshore pension funds, sovereign funds and private equity fi rms have played a key role as

buyers in these recent transactions as well as assisting in the recapitalisation of various listed,

unlisted and wholesale funds in the Sector.

Examples of active offshore investors include K-REIT Asia (a Singaporean based REIT that purchased

two Sydney offi ce buildings in 2010), NPS (National Pension Service of Korea that acquired 88 Phillip

Street, Sydney for $685 million in 2010) and RREEF (a global property fund that acquired 737 Bourke

Street, Melbourne for $113 million).

MERGER AND ACQUISITION ACTIVITYThe large discounts to NTA experienced by the small and mid-cap REITs have contributed to an

increase in acquisition activity and consolidation among the Sector. In particular, those REITs that

continued to have diffi culty accessing liquidity and securing re-fi nancing have been attractive targets.

Buyers have included both overseas fi nancial investors and locally based REITs that have recapitalised

and have the balance sheet strength to undertake acquisitions without signifi cantly impacting

gearing ratios.

Major Sector mergers and acquisitions during FY11 are detailed below.

TARGET ACQUIRER

LOCATION

OF ACQUIRER

DATE

ANNOUNCED

DATE

COMPLETED

PREMIUM (DISCOUNT)

OF OFFER PRICE TO

LAST REPORTED NTA

Westpac Offi ce

Trust Mirvac Group Australia April 2010 August 2010 (5)%

ING Industrial

Fund

Goodman

Group + other

investors

Australia August 2010 April 2011 (2)%

EDT Retail Trust EPN GP LLC United States October 2010 June 2011 (18)%

Challenger

Wine Trust

CK Life Sciences

International

Holdings Inc

Hong Kong November 2010 February 2011 (41)%

Rabinov

Property Trust

Growthpoint

Properties

Australia

Australia April 2011 August 2011 1%

Valad Property

Group

Blackstone

Group LPUnited States April 2011 August 2011 (22)%

29SURVEY FINDINGS

A-REIT SURVEY 2011

SECTOR GEARING Gearing across all 2011 Survey participants has decreased slightly during FY11 with the average gearing decreasing

to 47% from the FY10 level of 49%. The decrease has been caused by an average increase in property valuations,

and decreased borrowing by 2011 Survey participants.

There is a clear distinction between the gearing levels of the larger and smaller REITs. Through a combination of

capital raisings, asset sales and other capital management initiatives, a number of the more established entities in the

Sector took the opportunity to repair their balance sheets during 2009 and 2010 and reduce gearing levels. REITs with

market capitalisations of over $1 billion have average gearing levels of 28%. Gearing is defi ned as net debt (interest bearing

liabilities less cash) divided by total assets.

However, smaller entities in the Sector found accessing liquidity (both equity and debt) more diffi cult and

a number of these entities continue to have very leveraged balance sheet positions. A-REITs with market

capitalisations of less than $1 billion have average gearing levels of 55%. Many of these balance sheets have

become over extended as a result of debt-funded overseas acquisitions at the top of the valuation cycle while

subsequent declining asset values expanded gearing ratios further.

The smaller entities have not been able to raise suffi cient equity capital, or had lower quality assets that were not

easily able to be offl oaded (or were sold at a large discount to valuation), to offset the effect of declining asset

values on gearing.

SECTOR GEARING HISTORY (AVERAGE OF PARTICIPANTS)

0%

AVERAGE GEARING

201120041998

20%

30%

40%

50%

AVERAGE GEARING BY SUB-SECTOR WITH PRIOR YEAR COMPARISON

RETAIL OFFICE DIVERSIFIED INDUSTRIAL

54% 48% 43% 45%53% 52% 44% 54%

20102011

30 SURVEY FINDINGS

A-REIT SURVEY 2011

LOCATION OF PROPERTY ASSETSFollowing a strong period of global expansion up to 2007, the global

fi nancial crisis has resulted in a retreat from abroad by the Sector, as many

REITs suffered large declines in the values of their overseas investments.

Two large-cap REITs however, Westfi eld Group and Goodman Group, have

retained a global model and continue to have signifi cant exposures in

America, Europe and Asia.

Detailed opposite is a breakdown of property assets by location over the

fi ve years to 30 June 2011.

The proportion of property assets located in Australia has increased

signifi cantly in recent years to 79% at 30 June 2011. This compares with

only 64% of assets being located in Australia at 30 June 2007.

There was a decline in the proportion of international assets during FY11,

refl ecting the scaling back of international operations (and in particular

US assets) and a re-focus towards Australian portfolios. Notwithstanding

this decline, approximately 13% of property assets remain located in the

US. Twelve entities continue to own property assets in the US totalling

almost $13 billion.

We note that subsequent to year end Charter Hall Offi ce REIT announced

the proposed sale of its entire US portfolio for a gross price of US$1.7

billion. As REITs continue to focus on a back-to basics strategy which

involves selling non-core assets, we expect to see further sales of offshore

assets and the proportion of assets held in Australia continue to increase.

LOCATION OF PROPERTY ASSETS

EUROPE 5%ASIA 2%

AUSTRALIA 79%

US 13%

NZ 1%

FY11 FY10 FY09 FY08 FY070

100

AUSTRALIA US EUROPE ASIA NZ

31SURVEY FINDINGS

A-REIT SURVEY 2011

WEIGHTED AVERAGE LEASE EXPIRYThe weighted average term to expiry for leases is a measure of the security

and stability of future tenure and income; however a shorter term to expiry

in some situations may be viewed as a positive as it allows for earlier rental

re-negotiations to take advantage of any market movements.

Average WALE increased in FY11 to 5.6, from 4.7 in FY10.

The diversifi ed sub-sector had the highest average lease expiry of 6.8 years,

as a result of trusts such as ALE Property Group (17 years), the Generation

Healthcare REIT (11.6 years) and Galileo Japan Trust (11 years) having

WALEs signifi cantly above the Sector average.

The sub-sector with the shortest WALE is industrial at 4.4 years.

COST OF BORROWINGS The cost of an entity’s borrowings refl ects a number of factors including

the lender’s assessment of the borrower’s risk and of the quality and

location of assets securing the borrowings, and the borrower’s gearing

and interest coverage. Overall during FY11 the Sector’s average weighted

average interest rate (being a weighted average of the cost of all fi nance

facilities of an entity) rose from 5.7% to 6.1%, refl ecting the post GFC

higher funding cost environment.

Entities with operations in the United States and Japan continue to access

borrowing facilities at a far cheaper cost than Australian based A-REITs.

The retail sub-sector recorded the highest weighted average interest rate

of 6.7%.

The industrial sub-sector had the lowest result of 5%.

WEIGHTED AVERAGE LEASE EXPIRY BY SUB-SECTOR WITH PRIOR YEAR

COMPARISON

WEIGHTED AVERAGE INTEREST RATE BY SUB-SECTOR WITH PRIOR YEAR

COMPARISON

INDUSTRIALDIVERSIFIEDOFFICERETAIL

6.7% 6.3% 6.1% 5.7%5.8% 6.6% 5.1% 6.5%

20102011 20102011

INDUSTRIALDIVERSIFIEDOFFICERETAIL

4.5 4.7 6.8 4.44.5 3.9 5.1 4.6

32 TOP 10 RANKINGS

5. FULL RANKINGS

CQOCharter Hall Offi ce REIT ranked number one overall

OFFICESector strongly represented among Top 10 rankings

33TOP 10 RANKINGS

A-REIT SURVEY 2011

FULL RANKINGS

RANK ENTITY

1 Charter Hall Offi ce REIT

2 GPT Group

3 Investa Offi ce Fund

4 Multiplex European Property Fund

5 Westfi eld Group

6 ALE Property Group

7 Australian Education Trust

8 CFS Retail Property Trust

9 Commonwealth Property Offi ce Fund

10 Charter Hall Group

11 Thakral Holdings Group

12 Charter Hall Retail REIT

13 Generation Healthcare REIT

14 Dexus Property Group

15 Growthpoint Properties Australia

16 Stockland Corporation Limited

17 Cromwell Property Group

18 Astro Japan Property Group

19 Trinity Group

20 Trafalgar Corporate Group

21 Mirvac Group

22 Bunnings Warehouse Property Trust

23 Westfi eld Retail Trust

24 Goodman Limited

25 Abacus Property Group

26 Centro Retail Group

27 Australand Property Group

28 Challenger Diversifi ed Property Group

29 ING Real Estate Community Living Group

30 Aspen Group

31 EDT Retail Trust

32 Brookfi eld Prime Property Fund

33 Tishman Speyer Offi ce Fund

34 RNY Property Trust

35 Mirvac Industrial Trust

36 ING Real Estate Entertainment Fund

37 Real Estate Capital Partners USA Property Trust

38 Centro Properties Group

39 Galileo Japan Trust

40 APN European Retail Property Group

CPACommonwealth Property Offi ce Fund

was the most liquid stock over the year

FIVEEntities traded at a premium to NTA

233%Highest one year return achieved by

Trinity Group

16%Highest three year return achieved

by Australian Education Trust

34 DETAILED SURVEY FINDINGS

6. DETAILED SURVEY RESULTS

35DETAILED SURVEY FINDINGS

A-REIT SURVEY 2011

-20% -10% 0% 10% 20%

-3.7%

-5.2%

19.3%

11.3%

11.2%

11.0%

10.7%

10.5%

9.7%

9.7%

9.5%

9.5%

8.6%

8.4%

7.7%

7.6%

7.4%

7.3%

6.9%

6.8%

6.7%

6.7%

6.7%

6.6%

6.5%

6.3%

6.2%

6.0%

5.7%

4.6%

4.5%

3.8%

3.5%

2.6%

2.1%

1.8%

1.2%

1.0%

-1.6%

-19.7%

OPERATING CASH YIELD

RANK ENTITY









9 Aspen Group







16 EDT Retail Trust

17 Westfi eld Group









26 Goodman Limited

27 GPT Group


29 Mirvac Group





34 Trinity Group








0% 5% 10% 15% 20%

20.3%

13.3%

13.1%

10.0%

9.7%

9.0%

8.9%

8.4%

8.1%

7.8%

7.5%

7.3%

6.9%

6.8%

6.8%

6.6%

6.4%

6.3%

6.3%

6.1%

6.1%

6.1%

5.8%

5.7%

5.2%

4.2%

0.4%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

DISTRIBUTION RETURN ON INVESTMENT

RANK ENTITY






6 Aspen Group












18 Mirvac Group






24 GPT Group

25 Goodman Limited

26 Westfi eld Group



29 Trinity Group









38 EDT Retail Trust




A-REIT SURVEY 2011

0% 20% 40% 60% 80% 100%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

85.%

79.3%

77.2%

72.1%

68.3%

61.2%

53.5%

42.0%

37.2%

33.7%

32.8%

31.1%

29.1%

24.0%

22.6%

22.0%

20.3%

14.1%

11.3%

0.5%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

TAX ADVANTAGED DISTRIBUTIONRANK ENTITY





5 GPT Group






11 Westfi eld Group















26 Mirvac Group

27 Aspen Group




31 EDT Retail Trust


33 Goodman Limited







40 Trinity Group


A-REIT SURVEY 2011

-250% -200% -150% -100% -50% 0% 50%

45.9%

42.8%

33.3%

-65.3%

-69.8%

-100.0%

-209.6%

-0.9%

-1.3%

-1.7%

-2.3%

-2.4%

-2.9%

-4.0%

-4.1%

-5.1%

-11.3%

-13.2%

-27.3%

-28.8%

-32.6%

12.9%

7.1%

6.3%

5.9%

5.7%

5.5%

5.4%

4.0%

3.7%

3.2%

2.8%

2.0%

1.6%

1.5%

1.4%

1.0%

0.0%

25.1%

-35.8%

MOVEMENT IN NTA PER SECURITY

RANK ENTITY

1 Trinity Group









10 GPT Group



13 EDT Retail Trust



16 Goodman Limited










26 Mirvac Group

27 Aspen Group








35 Westfi eld Group







-120% -100% -80% -60% -40% -20% 20% 40%0%

8.8%

7.6%

2.9%

0.2%

-4.7%

-5.7%

-8.5%

-8.6%

-14.4%

-15.4%

-15.8%

-16.1%

-16.1%

-19.6%

-21.6%

-23.2%

-23.2%

-25.7%

-26.3%

-31.8%

-33.0%

-33.7%

-36.0%

-42.2%

-42.4%

-42.4%

-48.2%

-55.1%

-65.7%

-66.5%

-69.9%

-70.1%

-81.9%

-91.8%

-102.8%

-108.1%

37.8%

-17.3%

-17.5%

-18.0%

PREMIUM / (DISCOUNT) TO NTA RANK

RANK ENTITY

1 Goodman Limited

2 Westfi eld Group










12 GPT Group







19 Mirvac Group





24 Aspen Group

25 EDT Retail Trust







32 Trinity Group










-100% -50% 0% 50% 100% 150% 200% 250%

-0.2%

-1.1%

-2.1%

-3.8%

-3.8%

-27.6%

-60.8%

-72.5%

-73.0%

233.3%

130.0%

109.3%

74.6%

73.0%

63.1%

61.5%

51.2%

42.7%

26.9%

25.7%

21.8%

21.3%

19.0%

18.7%

16.8%

15.6%

14.2%

13.8%

11.2%

9.3%

7.6%

6.9%

4.8%

2.9%

2.7%

1.6%

1.3%

0.0%

33.1%

-40.0%

1 YEAR RETURN RANK

RANK ENTITY

1 Trinity Group




5 EDT Retail Trust










15 GPT Group


17 Goodman Limited







24 Aspen Group





29 Mirvac Group






35 Westfi eld Group






-100% -80% -60% -40% -20% 0% 20% 40% 60%

10.8%

8.0%

7.3%

6.3%

4.9%

3.3%

2.2%

1.7%

-2.2%

-3.4%

-5.2%

-5.8%

-5.9%

-7.2%

-8.0%

-8.1%

-9.2%

-9.6%

-10.8%

-14.6%

-17.8%

-17.9%

-18.1%

-18.3%

-20.8%

-23.2%

-24.8%

-31.2%

-35.5%

-39.2%

-40.8%

-42.4%

-43.5%

-46.7%

-51.4%

-64.4%

-69.8%

-74.9%

16.1%

16.0%

3 YEAR RETURN RANK

RANK ENTITY















15 Westfi eld Group








23 Mirvac Group



26 Aspen Group



29 GPT Group

30 Goodman Limited


32 EDT Retail Trust



35 Trinity Group







148.8%

145.2%

136.1%

133.7%

127.3%

124.0%

123.5%

113.3%

106.0%

102.0%

88.9%

87.7%

77.1%

68.6%

63.8%

57.1%

56.8%

48.7%

45.2%

43.8%

42.7%

37.1%

36.9%

36.5%

36.5%

33.7%

30.3%

29.8%

26.3%

26.1%

25.7%

22.2%

20.0%

18.3%

14.78%

14.24%

14.20%

0% 30% 60% 90% 120% 150%

7.36%

3.69%

2.76%

LIQUIDITY RANK

RANK ENTITY


2 Mirvac Group


4 GPT Group



7 Westfi eld Group



10 Goodman Limited











21 Aspen Group

22 Trinity Group





27 EDT Retail Trust















A-REIT SURVEY 2011

44 EXPLANATION OF CRITERIA AND RANKINGS

A-REIT SURVEY 2011

7. EXPLANATION OF CRITERIA AND RANKINGS

A brief explanation of the criteria used in the 2011 Survey is provided below.

FINANCIAL CRITERIACash yield on weighted average net assets

Calculated by dividing operating cashfl ow by the total of weighted average

shareholders’/unitholders’ funds and the simple average of reserves and

any undistributed income.

The fi nancial year end of the entity has been used in all cases, except for 31

December entities where 30 June 2011 fi gures have been sourced from half

year reports.

Distribution yield

Calculated by dividing the distribution per ordinary share/unit paid for the

entity’s fi nancial year by the average of the market price of ordinary shares/

units in the Entity. The average market price calculated on a daily closing

price basis with prices sourced from Bloomberg. Capital distributions have

been excluded from this calculation.

Where accounts have been prepared for a period of less than one year, the

distribution has been annualised.

Tax advantaged distributions

The total percentage of the distribution from each entity which is tax

deferred.

Where this information was not disclosed in the annual report, BDO

attempted to obtain the detail required from other sources.

Movement in NTA

Calculated by assessing the percentage increase (or decrease) in Net

Tangible Assets (NTA) per security over the entities’ fi nancial year by using

the opening and closing fi gures for NTA per security.

Where an entity was listed during the year, BDO has assessed the opening

NTA as being equal to the issue price.

In all cases the fi nancial year end of the entity has been used, except for 31

December year ends where we have used NTA from the 30 June 2010 and

2011 half year reports.

Premium/(Discount) to NTA

Calculated by subtracting the average net tangible assets per security from

the average market price per security, and dividing this by the average net

tangible assets per security.

We have ranked this criteria with entities trading at a premium to NTA as

the highest ranking.

INVESTMENT CRITERIATotal return

This measure, over both the one year and three years ended 30 June 2011,

records both the income return (i.e. distributions) and capital appreciation

(i.e. movement in market price).

Information sourced from UBS and Bloomberg has been used to compile

this criteria.

Entities which have traded for less than three years have been awarded a

result based on a weighting of one third its one year return and two thirds

the median Sector three year return for this measure, and subsequently

ranked accordingly.

45EXPLANATION OF CRITERIA AND RANKINGS

A-REIT SURVEY 2011

Volume of trading on ASX

This liquidity measure is expressed as a percentage, and is calculated by

dividing the total volume of units/shares traded in each entity for the year

ended 30 June 2011 by the weighted average total units/shares on issue.

This provides an indication of relative liquidity, irrespective of entity size.

METHOD OF RANKINGA total score of 200 (maximum) has been used, comprising 100 points

for all fi nancial criteria and 100 points for all investment criteria. In

determining the fi nal rankings the scores on each component were

aggregated (not the rankings) such that the relative performance within

each criteria are maintained in determining the overall rankings.

Financial criteria

The tests used in the fi nancial criteria and assigned weightings are as

follows:

FINANCIAL CRITERIA WEIGHTED SCORE

Cash yield on weighted average net assets 20

Distribution yield 20

Tax advantaged distributions 20

Movement in NTA 20

Premium/(Discount) to NTA 20

PERFECT SCORE 100

In each of the above tests the scores were scaled so that the top performer

in each test received the maximum available score for the relevant criteria.

Ranks were then assigned based on the scaled scores.

Investment criteria

The tests used in the investment criteria and assigned weightings

are as follows:

INVESTMENT CRITERIA WEIGHTED SCORE

Total return (one year) 50

Total return (three year) 25

Volume of trading on ASX 25

PERFECT SCORE 100

The above tests have been ranked using a variable points system for each

test, based on the number and importance of aspects taken into account.

In each of the tests the scores were scaled so that the top performer in each

test received the maximum available score for the relevant criteria. Ranks

were then assigned based on the scaled scores.

Median results

For an entity which could not be scored equitably in a particular criteria,

due to its recent listing, the unique nature of an entity’s activities, or lack

of available information for the relevant criteria, that entity was allocated

a median result for the purpose of ranking. This ranking was then weighted

and scored as usual. For all such instances ‘N/A’ appears in the result

column for the individual criteria tables. For those entities in which

a three year investment return is not available, we have estimated

a three year return based on the following: one third weighting to the

one year investment return, and two thirds weighting to the median

three year return.

46 CORPORATE FINANCE AT BDO

8. CORPORATE FINANCE AT BDO

47CORPORATE FINANCE AT BDO

A-REIT SURVEY 2011

KEY CONTACTSThe BDO Corporate Finance team consists of over 70 professionals,

servicing the corporate and investment sectors. Our dedicated team

can assist you in making strategic business decisions through specialist

transaction advice, commercially sound valuations, due diligence, effective

merger and acquisition strategies, and fi nancial modelling advice.

Our international presence gives our Corporate Finance team

representation in the world’s main commercial and fi nancial centres.

This extensive reach enables our clients to take advantage of global

opportunities as well as draw on BDO experience and resources worldwide.

This is of signifi cant benefi t in identifying and facilitating opportunities

across the globe.

Sebastian Stevens

National Corporate Finance

Leader, Sydney

Tel: +61 2 9286 5555

[email protected]

Steven Sorbello

Partner, Brisbane

Tel: +61 7 3237 5999

[email protected]

John Blight

Partner, Melbourne

Tel: +61 3 8320 2222

[email protected]

Gregory Wiese

Partner, Adelaide

Tel: +61 8 8223 1066

[email protected]

Chris MCTye

Partner, Hobart

Tel: +61 3 6234 2499

[email protected]

Sherif Andrawes

Partner, Perth

Tel: +61 8 9360 4200

[email protected]

ACHIEVEMENTS• Australia’s number one provider of Independent Expert’s Reports

(2005 – 2010)

• Australia’s leading accounting adviser for IPOs (2007 – 2010) *

*Based on number of transactions.

Source: CONNECT 4, wholly owned business of Thomson Reuters (Professional) Australia Limited.

48 CORPORATE FINANCE AT BDO

The BDO Corporate Finance team has provided advisory services in the

following property transactions.

LISTED PROPERTY EXPERIENCE

CLIENT SERVICES PROVIDED

Growthpoint Properties Australia Independent Financial Model Review

Growthpoint Properties Australia Due Diligence

Growthpoint Properties Australia Independent Accountant’s Report

Macquarie DDR Trust Restructure

Multiplex Prime Property Fund Corporate Advisory

MacarthurCook Limited Valuation

Pelorus Property Group Independent Expert Report

Becton Investment Management Limited Valuation

Valad Funds Management Group Valuation


Valad Funds Management Group Valuation

Becton Investment Management Limited Valuation

MacarthuCook Industrial Property Fund Initial Public Offer

WRF Securities Acquisition


MacarthurCook Asian Real Estate Property Trust Initial Public Offer

SAI Capital Initial Public Offer

Australian Unity Due Diligence

Pelorus Property Investments Limited Capital Raising

Lachlan Diversifi ed Property Fund Restructure

JF Meridian Management Limited Management Fee Restructure

McLaughlins Financial ServicesAcquisition of Unlisted Trusts by MFS

Diversifi ed

Telstra Stadium Valuation

Austcorp TOWERS Trust Hybrid Security Offering

MacarthuCook Property Securities Fund Rights Issue

Pelorus Pipes – Bakehouse Fund Restructure

MFS Diversifi ed Trust Preferred Equity Raising

Australand Property Group Further Stapling

Australand Wholesale Property Trust #3, #4 Takeover

Macquarie Bank/Medallist Joint Venture Valuation

Over 50’s Group Due Diligence

MacarthurCook Property Securities Fund Initial Public Offer

Charter Hall Property Trust Stapling/Internalisation/Listing

Macquarie Leisure Trust Group Management Fee Restructure

McLaughlins Financial Services Limited Group Restructure

GPT Management Ltd Takeover Offer

FKP Limited Stapling/Restructure

Macquarie Goodman Funds Management Limited Valuation – All FUM Rights

Becton Property Group Initial Public Offer

Australand Holdings Group Acquisition

MFS Hotel Property Trust Restructure

Australian Value Funds Management Acquisition

49BDO CORPORATE FINANCE TEAM

UNLISTED PROPERTY EXPERIENCE

CLIENT SERVICES PROVIDED

Brookfi eld Multiplex Capital Management Limited Independent Expert Report

Eureka Funds Management Limited Financial Modelling

CorVal Partners Due Diligence

360 Capital Limited Financial Modelling

Aspen Development Fund No.1 Limited Independent Expert Report

Ipswich City Properties Financial Advisor

Opus Capital Group Valuation

AMP Capital Investors Due Diligence

Investec Property Limited Independent Accountant’s Report

Colonial First State Global Asset Management Expert Advice

Macquarie DDR Trust Restructure

Eureka Funds Management Valuations

Mirvac Investment Management Management Fee Review

Becton Investment Management Independent Accountant’s Report

Orchards Funds Management Due Diligence / Independent Accountant’s Report

Austock Property Funds Management Acquisition of Ceramic Funds Management Group

Key Capital Property Trust No 2 Independent Accountant’s Report

WRF Southern River Syndicate Independent Accountant’s Report and Tax Advice

Pelorus Storage Fund Capital Raising

Lachlan Offi ce Property Fund Capital Raising

Key Capital Property Trust Independent Accountant’s Report

Trilogy Funds Management Capital Raising

Hyperion Property Syndicate Limited Capital Raising

MFS Diversifi ed Trust – Acquisition of 3 Trusts Acquisition

WRF X-One Syndicate Independent Accountant’s Report and Tax Advice

Toga Accommodation Fund Capital Raising


Abacus Storage Funds Management Limited Capital Raising

Macquarie Direct Property – Stapling of seven Unlisted Trusts

WRF Henley Brook Syndicate Independent Accountant’s Report and Tax Advice

MacarthuCook Offi ce Property Trust Independent Accountant’s Report

Mariner Property Trust – Miller Street Trust Capital Raising

Flowers Group Valuation

Grant Samuel – Wholesale Funds Capital Raising

WRF 9 to 5 Syndicate Independent Accountant’s Report and Tax Advice

Becton Property Group Restructure

Eureka Funds Management – Wholesale Funds Restructure

Trilogy Capital Services Pty Limited Capital Raising

Hyperion Property Syndicate Capital Raising

Century Funds Management – Merger with Bankminister Acquisition

Mariner Property Group – Sydney Opera House Car Park Capital Raising

James Fielding Group – 4 Way Trust Merger Merger


Tankstream Capital – Tankstream Property Investment Fund Capital Raising

Investa Property Group – Collins Property Trust Capital Raising

WRF VII Property Syndicate Independent Accountant’s Report and Tax Advice

Mariner Property Group – Mariner Property Trust #1 Capital Raising

Domaine Property Group Capital Raising

50 ABOUT BDO

A-REIT SURVEY 2011

135Present in over 135 countries

FifthThe BDO network is the world’s fi fth largest accountancy network

1,082Offi ces everywhere you need them

48,807Partners and staff worldwide

As the fi fth largest full service accounting and advisory network nationally

and internationally, our deep expertise spans multiple specialist services.

We work with many leading brands and companies ranging in size from

large corporate organisations, private businesses, families, entrepreneurs

and individuals across a wide range of industry sectors. We excel at

creating strong relationships with clients who are seeking a combination

of technical excellence with a specialised range of services and a desire

for outstanding client relationships. Our ability to create and maintain

outstanding relationships is based on our understanding that each of our

clients is distinctively different, and it is their unique needs that drive

our distinctively different approach. Our clients tell us it is the way we

listen to them, work with them and how we see them that makes our

ABOUT BDO

approach distinctively different. We enjoy outstanding relationships with

our clients. We focus on what is important to them; adopting a partnership

style approach, being responsive and reliable, keeping our promises and

maintaining open and frank communication.

We are committed to delivering value for our clients, so we do what it

takes to get to know their businesses and the sector they operate in. This is

why we have dedicated teams who have specialist industry knowledge and

a deep understanding and appreciation of risks, issues and opportunities

in a wide range of sectors, including Property & Construction, and Funds

Management.

BDO delivers a wide range of services to the Property & Construction,

and Funds Management sectors including fi nancial audits, trust audits,

compliance audits, control audits and outgoing audits. We also advise on

real estate investment trusts, fund structuring and corporate governance

for funds.

51DISCLAIMER

A-REIT SURVEY 2011

9. DISCLAIMER

SOURCES OF INFORMATION• A-REIT Annual Reports and Half-year Reports

• Australian Securities Exchange

• UBS’ S&P/ASX Property 200 Index data and S&P/ASX Property 300

Index data

• Bloomberg

• Other public data.

BDO disclaims all liability arising from any person acting on information

and statements made herein.

The contents of this 2011 Survey should not be treated as advice to

acquire, hold or dispose of securities and readers are advised to obtain

professional advice before making any investment decision based on

information contained in this 2011 Survey.

From time to time BDO partners and staff may hold relevant interests

in securities issued by the Entities reported upon. BDO has not received

any commission, brokerage or other undisclosed benefi t as a result of any

statements made.

Liability limited by a scheme approved under Professional Standards

Legislation.

At all times, BDO is committed to protecting the privacy of our clients,

contacts, and that of their staff. Any personal information held by BDO for

fi nancial or accounting purposes will only be used by BDO to support your

relationship with us and to ensure you receive the most appropriate range

of information and services. (BDO’s Privacy Statement is available upon

request).

GLOSSARY

All Ordinaries Index containing the largest 500 ASX companies by

market capitalisation

ASX Australian Securities Exchange

A-REIT Australian real estate investment trust

Distribution Either a distribution from a trust or dividend from a

company

DPS Distribution per Security

FY11 Financial year-ending 30 June 2011

FY10 Financial year-ending 30 June 2010

the Sector A-REIT (Australian listed property) sector

Property Index S&P/ASX Property 200 Index

NTA Net tangible assets

p.a. Per annum

REIT Real estate investment trust

Security Either an ordinary share in a company or unit in a

trust

Security Price The price of an ordinary share in a company or unit in

a trust

the 2011 Survey BDO A-REIT survey covering the year-ending 30 June

2011

the 2010 Survey BDO A-REIT survey covering the year-ending 30 June

2010

Total return Change in Security Price (capital) plus Distributions

US United States

WALE Weighted average lease expiry

This 2011 Survey has been prepared by BDO Securities (NSW-VIC) Pty

Limited AFS Licence 222438 (“BDO”).

Although BDO has taken due care to ensure the accuracy of this 2011

Survey, no warranties are given in relation to the statements and

information contained herein.

52 DISCLAIMER

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This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specifi c situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specifi c professional advice. Please contact the BDO member fi rms in Australia to discuss these matters in the context of your particular circumstances. BDO (Australia) Ltd and each BDO member fi rm in Australia, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

BDO Corporate Finance (NSW-VIC) Pty Limited ABN 83 130 172 333 AFS Licence 222438 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (NSW-VIC) Pty Limited and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member fi rms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of fi nancial services licensees) in each State or Territory other than Tasmania.

BDO is the brand name for the BDO network and for each of the BDO member fi rms.

© 2011 BDO Corporate Finance (NSW-VIC) Pty Limited. All rights reserved.

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